Turkish earthquake impact on the polyester industry chain

After a strong earthquake struck near the Syrian border in southern Turkey on the Feb 6th, it’s heard that 2379 people were killed, 14483 were injured and 7840 were rescued from the rubble of collapsed buildings.

Turkey is an important production, consumption and trade center for Eurasian textile and PET bottle chips. After the earthquake in Turkey, market participators are concerned about the situation of the local PET bottle chip factories. At present, the local polyester capacity in Turkey is about 2.15 million tons, about half of which is the production capacity of PET bottle chips. Among them, in November 2022, with the launch of new production capacity of koksan PET bottle chip factory, Turkey's PET bottle chip production capacity exceeded 1 million tons for the first time, becoming the largest PET bottle chip production base in the Middle East.

According to CCFGroup, the main products of local polyester factories in Turkey are PET bottle chips. The provinces near to the epicenter are mainly Adana and Gaziantep. There are mainly four PET bottle chip factories, namely Meltem, Indorama, Koksan and Sasa. Among them, the latter three have PET bottle chip factories located near the epicenter of the earthquake. According to feedback from local customers, PET bottle chip factories in Indorama, Koksan and Sasa not far from the epicenter are still operating normally. However, due to the impact of the earthquake, staff cannot be in place in time, and the downstream plants of Koksan has been shut down. In addition, the earthquake was mainly located in the southeast seismic zone of Turkey, so the Corlu factory of indorama in the northwest has not been affected yet.

In addition to PET bottle chips, the local production capacity of polyester filament yarn is not large, Korteks and Bursa, with production capacity more than 150,000 tons/year, are not in the earthquake zone. In addition, the PET fiber chip plant of SASA is located in Adana, which is relatively close to the epicenter, but it has not been heard of shutting down yet. In terms of polyester staple fiber, SASA has a PSF factory with a production capacity of 150,000 tons/year in Adana, and Kosa has a polyester production capacity of 150,000 tons/year in Gaziantep. In terms of BOPET film, Superfilm has a 50,000 tons/year BOPET film plant in Gaziantep.

Judging from the import and export data in 2022, Turkey imported 160,000 tons of PET bottle chips from January to November 2022, and exported 238,000 tons, of which 70-80% of the imports came from mainland China, and the exports were mainly sold to Italy and other EU countries. According to Chinese customs data, Turkey imported 179,000 tons of PET bottle chips from China in 2022, accounting for about 4% of China's total exports of PET bottle chips. Although Turkey is also the main source of PET bottle chips for the EU, in terms of absolute quantity, Turkey's supply to the EU is relatively limited, and the EU's main sources are India, China, South Korea, Vietnam and other places.

In terms of polyester products, exports of China’s PSF to Turkey totaled 37kt, accounting for 3.8%. Exports of PFY to Turkey amounted to 269kt, taking up 8.1%of the total. Turkey imported 37kt of PIY from China, occupying 7% of the total. In addition, in 2022, Turkey imported 511,000 tons of MEG, of which more than 80% were imported from the United States; about 1.62 million tons of PTA were imported (data from January to November 2022, and it is expected to be close to 1.8 million tons for the whole year), most of which were originated from China and South Korea.

As for shipping issue, CCTV News reported on February 6th that at about 17:00 local time on February 6th, the container in the Turkish port of Iskenderun tipped over and caught fire for unknown reasons. The port of Iskenderun is Turkey's Mediterranean port, located in Turkey's Hatay province, which is an earthquake-stricken province. Offshore infrastructure was also damaged after a 7.7-magnitude earthquake struck southern Turkey. Because of the earthquake, part of the port terminal was damaged, and photos showed that a large number of containers collapsed. In addition, the operation of the Ceyhan oil terminal in Turkey has been suspended. Turkey has stopped sending crude oil to the Ceyhan export terminal along the Mediterranean coast as a precaution after a devastating earthquake, according to an official familiar with the matter.

Therefore, in the short term, if crustal movement occurs again in Turkey, the operation of ports in southern Turkey is expected to be affected to a certain extent. However, the operation of the polyester plants will not be impacted temporarily. CCFGroup will continue to follow up the sequent impact.